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Canadian Dollar Forecast: USD/CAD at Key Support, Canadian Jobs on Tap

By :   Matt Weller CFA, CMT , Head of Market Research
December 4, 2025 4:10 PM

USD/CAD Key Points

  • Canada reports its official jobs report at 8:30 ET tomorrow, with traders and economists expecting -1.5K jobs and 6.9% unemployment.
  • Even if we do see an outright decline in employment, it would indicate that Canadian labor market is softening, rather than outright imploding
  • USD/CAD is one of the cleanest charts in the entire FX market, leaving a clear setup to watch heading into the jobs release.

Like a restaurant that only serves appetizers but no main course, the Fed will head into next week’s monetary policy meeting with some secondary readings on the US labor market, but no official BLS jobs report in hand. Thankfully, at least the appetizers were good.

This morning’s Challenger jobs cut figure fell a whopping -53% from last month’s reading, coming in at “just” over 71K, and the weekly initial unemployment claims report from this morning also fell sharply to 191K, well below the 220K reading expected and at the lowest level since September 2022. While these figures continue to underscore the “low firing” aspect of the jobs market, the bigger concern for Jerome Powell and company is that we’re also seeing “low hiring,” as reflected in this week’s ADP jobs report and Revelio jobs survey. Traders have accordingly left the implied odds of another Fed interest rate cut next week near 90% with no significant data left on the calendar:

Source: CME FedWatch

Meanwhile, north of the 49th parallel, Canada will release its official jobs report tomorrow. Traders and economists expect it show a decline of -1.5K jobs and an uptick in the unemployment rate to 7.0%. This would come on the heels of back-to-back jobs gains of more than 60K.

Even if we do see an outright decline in employment, it would indicate that Canadian labor market is softening, rather than outright imploding. After all, total employment in Canada is still higher by nearly 300K jobs than this time last year, keeping a lid on inflation without (yet) tipping the economy toward recession. Accordingly, the Bank of Canada is expected to leave interest rates unchanged for the remainder of the year unless we see a truly shocking reading.

 

Source: RBC Economics, Statistics Canada

Canadian Dollar Technical Analysis: USD/CAD Daily Chart

Source: StoneX, TradingView

From a technical perspective, USD/CAD is one of the cleanest charts in the entire FX market. As the chart above shows, the pair has been rising within a well-defined bullish channel since mid-June, with clear horizontal resistance at 1.4130 and support at 1.3935.

Ahead of the jobs report, USD/CAD is testing the combination of the bottom of its bullish channel and the 1.3935 support level, though notably, the 14-day RSI in the lower panel has already broken its bullish range, hinting at a potential breakdown, especially if the Canadian jobs report is stronger than anticipated.

In that scenario, there is little in the way of significant support for hundreds of pips until closer to 1.3700, setting up a potential continuation trade to the downside. On the other hand, a softer-than-expected jobs report could still “save” the channel and keep the USD/CAD uptrend intact for a rally back toward the 50-day EMA near the 1.40 level.

-- Written by Matt Weller, Global Head of Research

Check out Matt’s Daily Market Update videos on YouTube and be sure to follow Matt on Twitter: @MWellerFX

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